Standing Committee A

[Mr. Jimmy Hood in the Chair]

Tax Credits Bill

Peter Luff: On a point of order, Mr. Hood. Last week we had a useful debate on the regulation-making powers in clause 10. I suggested that although the Bill contains some 19 regulatory powers it would be helpful for the good conduct of the Committee if we tried to avoid having too many debates about them, and your co-Chairman, Mr. Beard, agreed. Then, over the weekend, I saw a report in The Sunday Telegraph stating that the Government have used regulation-making powers to a record-breaking degree—4,155 times last year, which is an increase of one third on the previous record in 1997. The article says:
 ''Although MPs can vote against statutory instruments, in practice this never happens . . . MPs are now largely irrelevant to the way our laws are made.'' 
So far we have debated some nine regulation-making powers, three of which went through on the nod because of the guillotine, and there are about seven coming up in relation to our proceedings today and possibly on Thursday. The exact number depends on how one defines a regulation-making power; some are very narrow and some are very broad. Clause 23 certainly contains regulation-making powers. 
 In view of the revelation that the Government are using regulation-making powers on such a massive scale, Mr. Hood, what is your view on clause stand part debates in that respect? The Bill contains an enormous range of such powers, so will you allow us to test the Minister on the rationale behind each one?

Dawn Primarolo: Further to that point of order, Mr. Hood. The hon. Gentleman's question was addressed to you, and you decide on how best to handle our debates. However, I may be able to help the Committee. I have not seen the article that he mentioned, but our first concern is to ensure that draft amendments are available. We will discuss regulatory powers in the context of clauses 23 and 24—

Jimmy Hood: Order. The Minister is responding to a matter for debate that was raised by the hon. Gentleman in his point of order. Revelations in the press, regardless of whether they are factual, are not a matter for the Chair, and the hon. Gentleman should address his remarks to the Minister. In relation to clause stand part debates, I will consider them on their merits, as I always do.

Clause 23 - Payments

Howard Flight: I beg to move amendment No. 94, in page 16, line 19, leave out 'Subject to section 24'.

Jimmy Hood: With this it will be convenient to take the following:
 Amendment No. 36, in clause 24, page 16, line 28, leave out 'Regulations may' and insert 
 'Nothing in this Act shall entitle regulations to'.
 Amendment No. 37, in clause 24, page 16, line 30, at end insert 
'unless payment is made to such employers equal to the full economic cost to the employer of doing so.'.
 Amendment No. 51, in clause 24, page 16, line 30, at end insert 
'except where an employee requests payment into an account notified to the Board or via a Post Office, in which case the employee shall be entitled to receive payment in this manner'.
 Amendment No. 35, in clause 24, page 16, line 31, leave out subsections (2) to (7). 
 Amendment No. 104, in clause 24, page 17, line 2, at end insert 
'provided the Board shall reimburse the full costs of so doing to employers.'.
 Clause 24 stand part.

Howard Flight: I welcome you back to the Chair, Mr. Hood.
 Clauses 23 and 24 provide for child tax credits to be paid directly to the carer and for working tax credits to be paid by employers. They do not explicitly say what happens to the large numbers of self-employed people, but I assume that the intent is that they will be paid directly by the Revenue. 
 In the group of amendments that we are addressing, our amendments take two different lines and raise two separate issues. Amendments Nos. 36 and 35 would provide that working tax credits were not paid by employers but were paid directly to claimants. Amendment No. 37 raises the issue of remunerating employers for the economic costs incurred in making working tax credit payments, and amendment No. 104 raises the issue of the costs incurred in relation to the provision of information to employees. Liberal amendment No. 51 goes down the middle by stating that employees should be permitted to request direct payment to their banks or post office accounts. 
 There is some important background information to run through. There are currently about 5 million households getting support directly from the tax system. That involves around 300,000 employers in making payments, especially under the working families tax credit. The Carter review, which the Government instigated, found that employers have incurred £220 million of costs since these arrangements were introduced. The Bill extends tax credits to couples and individuals without children, which the Institute for Fiscal Studies estimates would add 250,000 single people and 170,000 working couples to those being paid tax credits by employer. 
 Overall, the total of 5 million households receiving support from the tax system would be raised to 6 million.

Steve Webb: One thing that struck me when I read those estimates was that the IFS could not have known the rate that the Government would pay for a second adult, which we have discovered that they plan to do, and that it could not have known the amount for lone parents through the working tax credit. Both those additions to the value of the credit will bring on extra people beyond those estimates.

Howard Flight: I thank the hon. Gentleman for that additional point. We are addressing a framework Bill, we do not know its provisions and that seems wrong to me and to the hon. Gentleman. The total number of households affected may be more than 6 million. The Government have argued that because child tax credits will be paid directly to the main carer this will offset the additional numbers of people with whom employers must deal under working tax credits. It is unclear whether that follows, but it is their line of defence.
 Amendments Nos. 35 and 36 take the route of providing for all tax credits, including working tax credits, to be paid directly. The logic behind this is separate from the issue of the costs to business. On Second Reading I referred to the consequence of that, which will be that people's pay packets will become a social wage that is unrelated to the economic reward for the job that they are doing. I am concerned, and the Government should be concerned, that this sends the wrong signal. There must be clear monetary signals if people are to be motivated to enhance their skills. If we are to achieve better productivity growth we need a more skilled population. In the past, people such as the parents of Lady Castle, who were coal miners in Wales, knew that to obtain skills was to progress in life. Happily, much of the Asian immigrant community knows that message, and its members get themselves more skills than other parts of the population. 
 The Government have admitted in their reports on skills that we are lagging far behind other developed economies. They predict that jobs will go vacant because of a lack of skill growth in the economy, and they point out that the proportion of the work force with intermediate vocational skills is one of the worst in the Organisation for Economic Co-operation and Development area. I put it to the Minister that there is a contradiction in that the Chancellor is saying that the top priority is to upskill to obtain productivity growth, which has declined, but we are making arrangements for pay that will send people the wrong signals. 
 The Government have argued that tax credits must be paid through the pay packet because of the stigma associated with the alternatives, but the inquiries that have been made point in the other direction. Employees prefer to receive such payments directly because they do not want either their employers or other members of staff getting to know their personal affairs.
 There is an issue—it is not major—about employees taking a credit risk on employers. If employers have received money from the Revenue and go bust before they have paid it out, employees could suffer. 
 In principle, the biggest concern is that there is a Speenhamland element in that there will be an obvious disincentive to employers to up pay where they are able to give out pay checks that include a significant element of tax credit, which is obviously a form of negative income tax. Psychologically, if not in market terms, it will lead to downward pressure on pay, especially in areas where pay is low. 
 There is another fundamental point that underlies the amendments, which are intended to tease out from the Government how they will remunerate employers for their work. The Bill provides for a negative income tax, and, as the Confederation of British Industry has made clear, the Government indicated to it at the outset that tax credits would be administered by a tax coding system. We discussed tax coding last week, but the CBI and the Government have deemed it to be impractical, and I should like to know why. In principle, a system of tax coding would avoid muddle and fraud because annual negative income tax returns would provide the evidence, which would be different from payroll information, which the Revenue would need. That would enable the continuity of payment that the Government seek, just as a system of coding and tax returns would make easier the payment of tax on a rolling basis. 
 There is a probing question implicit in the amendments: why is a negative income tax system impossible? Is it the Government's intention to work towards that? As the CBI has argued, it would be the best solution to the problem. 
 Amendments Nos. 37 and 104 are probing amendments. The Government commissioned the Carter review, and they have indicated that they will respond to the issue that it raises, namely their imposition of costs on all employers for administering tax credits. What are the Government proposing? They cannot use the argument that they do not want to reveal the rates of tax credits because that will be announced in the Budget. The Government are imposing burdens on employers and have said that perhaps they want to alleviate them, so it is reasonable to want to know what alleviation the Government are considering following the Carter review. 
 The Minister has argued that moving to 12 months, rather than six months, might ease the burden on employers. The employer view, as expressed by the CBI, is to the contrary: because of the 12-month gap, people whose circumstances change materially during the year will advise the Revenue accordingly and will, as a result, have changed tax credits. Although the employer will be given information by the Revenue, every time that that happens they will have to change their computer programming to pay out a different individual amount to the employees who are affected. 
 The Government's better regulation task force indicated its worries about the impact of tax credit costs and time burdens on small business. Such 
 businesses must focus on their business to survive and they are already burdened with excessive regulation. Here we have not just a regulation, but a task and small businesses do not necessarily have the money to easily subcontract their payrolls. With staff who work differential hours, they are likely to be faced with changes in the tax credit arrangements during the year. We would like to hear what the Government plan to do about the problem. We also register the major contradiction between an economy that ends up operating with a social wage and a Government policy that wants higher productivity growth and people to upskill themselves so that they become more valuable. The Government should listen to employees who clearly do not want to be paid their tax credits in the pay packet.

Hugo Swire: I have not spoken to date in this Committee, but today I wanted to speak about the burden on small business. We agree with much in the Bill and it is a laudable aim to try to eradicate poverty. The question is how to achieve that.
 I am not convinced that the Bill goes far enough to incentivise people who seek work or, as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said, that it goes far enough to encourage people to improve their skills and remove them from dependency on welfare. My worry, which is shared by my hon. Friends, is the burden that the clause imposes on particularly small businesses. In my constituency, businesses tend to be small—the average business employs two or three people in residential homes or tourist-related business. As the hon. Member for Teignbridge (Richard Younger-Ross) said last week, much of the employment is seasonal, which has its own implications. 
 We cannot assume that everything read in the press is accurate—far from it—but it is worth hon. Members bearing in mind the comments made by the right hon. Member for Birkenhead (Mr. Field) in The Mail on Sunday, the Sunday before last: 
 ''Tax credits are an open invitation to fraud. In effect the Government hands over its own chequebook to individual employers and invites them to fill in the cheques on behalf of any workers who claim they are eligible.'' 
We already know that £350 million is being swindled out of the tax credit system. Does the Paymaster General think that that amount will be eradicated, or even reduced, by any of the measures in the Bill? I suspect not. 
 Unlike some members of the Committee, I am neither an accountant nor a distinguished professor in this subject. In other words, in many senses I am the ideal guinea-pig to consider the Bill. However, I confess that I am somebody who even struggles with self-assessment, although, with the ever-increasing burden of personal taxation, there is very little to assess at the end of most years. If I find the system complicated, where does that leave the applicants? The applicants who ideally will benefit in most of these cases are the same group of people who regularly come to see us in our surgeries. Most of them struggle to understand the benefits to which they are currently entitled: they are confused over housing benefits and 
 other entitlements. I believe that in many cases—I do not say this in a condescending manner—some of these provisions will be beyond their comprehension. 
 I want to return to the burden on small businesses. We have heard this morning from various groups that have taken an interest in the Bill. Donald Martin, the United Kingdom policy chairman of the Federation of Small Businesses, said: 
 ''Businesses should not be treated as a social welfare arm of government. It is an invasion of employee privacy and a major distraction from business wealth creating activity.'' 
I worry that there is increasing evidence that, as businesses look forward to the months ahead, they are increasingly lacking confidence. It is a sensitive time of the financial cycle for many businesses, as they look ahead. At a time when we should be reducing the burden on small businesses to allow them to do what they are there to do, we seem to be asking them to do more rather than less. 
 Any business man, and I am sure that there are people with business backgrounds in this room—or, indeed, in our part of the world, any farmer or small business man—will say that their chief enemy is the ever-present red tape. It is worth reflecting that during Labour's first term of office red tape costs increased by a staggering £15 billion, according to the British Chamber of Commerce. That staggering sum does not even include the financial cost of the national minimum wage.

James Clappison: I hesitate to interrupt my hon. Friend when he is making an important point, but he mentioned a major survey carried out by the British Chamber of Commerce. He could have added that that survey was based on information from the Government's own regulatory impact assessment: it was not a figure plucked out of the air.

Hugo Swire: Indeed. I am grateful to my hon. Friend for intervening on that point. In all fairness to the Government, they are cognisant of some of the problems that the Bill will impose, and I shall return to that in a few moments when we discuss the Carter report.
 The working time directive has imposed recurring financial costs of £2.3 billion, the data protection directive recurring administrative costs of £630 million and the pollution directive recurring financial costs of around £1 billion. In addition, there is the student loan repayment, stakeholder pensions, the parental leave directive, the part-time workers directive and other potentially major burdens that we are told are in the pipeline. 
 As my hon. Friend the Member for Hertsmere just intervened, I want to return to the point that he raised, which Patrick Carter also referred to in the foreword to the Review of Payroll Services, when he said: 
 ''There is no doubt that the weight of payroll obligations falls disproportionately on small businesses, a part of the economy which employs 25 per cent. of the UK work force and contributes about 30 per cent. of gross domestic product.'' 
The segment of the economy represented by small businesses is its engine room, and any Government who wish to incentivise small businesses should aspire 
 to regulating them in as light a manner as possible. They should be nurtured and encouraged to grow where possible, rather than smothered in red tape. They should certainly not be distracted by a role as unpaid tax collector and welfare worker on the Government's behalf. As my hon. Friend the Member for Arundel and South Downs said this morning, there is talk following the Carter report of businesses being paid £200 to administer the payroll burden. That is not enough, but financial compensation is not the point: they should not be expected to fulfil that role in the first place. 
 In the light of our on-going debate, I urge the Minister and her colleagues to listen carefully not only to our concerns, but to those raised by the CBI, the Institute of Directors and the Federation of Small Businesses. Those organisations are at the coal furnace of the problem and are in an ideal position to give advice.

Steve Webb: Our amendment No. 51, which is part of this group, tackles the issue of payment through the pay packet from a slightly different angle by enabling the employee to opt instead for payment through a post office or into a bank account. I suspect that we shall consider post offices in some detail when we discuss amendments Nos. 101 and 113, but here we are trying to test the Government's belief that it is in the interests of the employee to be paid through the pay packet. It is clear that such a provision does not benefit employers, so unless it benefits employees one must question why it is there at all. If it is in employees' interests, it ought to be safe to give them a choice. As a good Liberal, I would argue that in cases such as this, employees are probably the best judges of what is in their own interests, rather than the state. Forcing them to receive payment in a particular way in order to educate them seems somewhat paternalistic—or, if one prefers, maternalistic.
 There is no particular reason why payment through the pay packet should communicate something that a visit to a post office or a glance at bank statement cannot. It is clear to people that they will get the credit only when they work, and it matters not whether it appears in their pay slip, on their bank statement, or in the form of cash payment at a post office. Such differences should not affect their ability to add together two numbers. 
 Much the same argument was made when we debated the Tax Credits Act 1999—the Paymaster General was in her place then, and the same Liberal Democrat spokesman was in his—and I expect that much the same response will be given now. None the less, we shall try to convince the Government. We argued then that it was not necessary for two payments to be made in the same way for people to add together two figures, but we were assured to the contrary and that the provision teaches the value of work. The Government's argument has even less validity now, because it is being applied to a much smaller payment. Instead of paying people £70, £80 or £90 a week through the pay packet—the original working families 
 tax credit route—the working tax credit will pay £15 typically. For goodness sake, do people really need to use the pay packet payment mechanism to add £15? 
 One could argue that the process of going to a post office and being handed crisp used fivers might lead someone to appreciate and understand the process more than would reading an entry on a pay slip or a line in a bank statement. Many people are paid not by their employer in cash but by direct credit transfer into a bank account. All that they actually get is one figure on their bank account whereas, if they could opt for direct payment from the board into their account, there would be two lines in their monthly bank statement: one for their take-home pay and one for their working credit. We are talking about the difference between two lines on a salary statement each month and two lines on a bank statement each month. One is supposed to give great educational benefit and teach people about the work ethic.

Chris Mole: Does the hon. Gentleman accept that most people receive a payslip, which would have the two lines, as well as having the single entry on the bank statement?

Steve Webb: Yes. What we are saying is that if, under our amendment, someone could opt for direct payment into their bank account instead of through their employer, the difference would be between a payslip with two lines, one for pay and one for working credit, and a bank statement with two lines, one for pay and one for working credit. I cannot for the life of me see why we should cost employers £90 million a year to deliver the educational benefit of two lines on a payslip instead of two lines on a bank statement. That seems absurd.
 The amendment is about giving people choice. If no one opted for that method of payment, the amendment would have no consequence. It would quickly become apparent that no one wanted it, and it could be struck out later. It would do nothing and might even complicate the system unnecessarily. But if people do opt for payment in that manner, refusing the amendment would damage their welfare, denying them a choice that they would like to exercise. 
 I shall not go into great length about the post office side of the issue, to which we shall return later, but it is safe to say that some people might want to value the infrastructure of their village and post office. Giving them the option to do that is beneficial. 
 The amendment is in the interests of employees because it gives them a choice that they would not otherwise have. It is in the interests of employers, who will have a lower administrative burden. I venture to suggest that the option will be especially attractive to people who change jobs. There are discontinuities when people leave one employer and start with another and problems trying to ensure that the tax credit, if delivered through the employer, continues with no disruption. People would not have that if they had payment into the post office or bank account; the credit would continue, uninterrupted.
 There are many reasons why people might want to take this option, and the Government deny them a choice if they do not allow that. If almost everyone who receives the tax credit opts for the choice in this amendment, we might make it universal and give up on the silly notion of payment through pay packets altogether, but that is more in the spirit of some of the Conservative amendments. 
 I have a final observation on some of the Conservative amendments. The hon. Member for Arundel and South Downs asked about the fact, pointed out by the CBI, that once upon a time the credits were to be delivered through the PAYE code. Members of the Social Security Committee with us today will have gone through the process of deciding that that would not be practical. One reason is that the whole system is based on family assessment. It becomes very muddy trying to deliver through an individual tax code an amount of money connected with family assessment.

Howard Flight: I readily appreciate the point that the hon. Gentleman makes, but I point out that if they have a tax code, claimants must have annual negative income tax returns, as I suggested. I am surprised that the Committee did not conclude that that, at the end of the day, would be a lot tidier and more reliable than the arrangements being opted for. As we discovered when debating them earlier, they are likely to create a lot of muddle and greyness. There is no ready way of reconciling to ensure that all claimants have provided the Revenue with the information that it needs to assess them. We also discovered that people would themselves be quite unable to understand what they were entitled to.

Steve Webb: As is so often the case, we are wrestling with the tension that in the British tax system it is not the custom for people, apart from high earners and the self-employed, to fill in annual tax returns. I would not want to force that on more people, given the choice.
 My point is that the Government talk the language of integrating taxes and benefits, and have gone a little way down that track, but there is a road block beyond which they will not go. Given the choice between harmonising individual assessment and family assessment in the Bill, they went for family assessment. It will never be possible to deliver it through the PAYE code, so there will always be an administrative burden if it is delivered as a separate payment by employers. 
 The welfare of individuals and employers is enhanced by giving people a choice, and our communities will also be enhanced, a point to which we shall return. I hope that the Minister will tell the Committee why she wants to deny people that choice.

Mark Hoban: I am concerned about the burden that the Bill will place on small businesses particularly and businesses in general. I raised this point on Second Reading and I want to return to it today in the context of this group of amendments and the clause stand part debate.
 We want responsibility for the payment of tax credits to move back to the Government, where I believe it belongs, to ensure that there is no 
 unnecessary burden on business. The regulatory impact assessment for the Bill stated that the cost to business would fall to about £90 million and that the majority of the £9.5 million saving would arise from moving from six monthly to annual claims. I welcome that reduction, which provides some relief to small businesses, but that cost does not show the true picture. 
 We must remember that employers will receive not just the coding notice that they receive for employees at present but, for those claiming tax credits, a separate piece of paper that will need to be processed to ensure that the correct tax credit is paid to the employee. Therefore, employers will need to meet the cost of processing each transaction that is a consequence of the Bill. One of my concerns is that, every time there is an in-year assessment, the employer will have to amend the employee's details on his payroll system and change the credit that he receives and there is a processing cost attached to that. 
 To an extent, some of my concerns were addressed in last week's debate about thresholds, when the Minister said that, as thresholds would be quite wide, there would be only a small requirement to submit an in-year assessment for changes in income. But until the thresholds have been set, it is difficult to assess the changes of income and the consequent in-year assessments on the employer's payroll costs and the number of transactions that he needs to process. 
 Again as we discussed last week, a number of other circumstances, particularly changes in family circumstances, give rise to changes in tax credits during the year. In its report on tax credits, the Institute of Fiscal Studies gave an idea of the quantum of changes that we might see as a consequence of some of the other changes. Based on evidence from the labour force survey, it suggested that at least 360,000 adults in couples with children and 90,000 lone parents change employment status within three months. Each one of those changes will trigger a cost to the employer, because the new employer will have to set up the tax credits for that employee. At least 840,000 adults in couples with children and 180,000 lone parents change employment status within 12 months, so again a large number of people are coming through the system. Each time somebody moves job, a new payroll cost will be incurred by an employer. 
 In terms of changes in family make-up, at least 225,000 couples with children break up and at least 200,000 lone parents start to cohabit within 12 months, again a change in family circumstances that will give rise to a change in tax credits for the employee and an additional cost on business as a consequence. Costs could be removed from the employer if the Inland Revenue required direct payment of all tax credits to the employee and did not require the employer to process those costs. 
 Another aspect of the Bill that will have an impact on businesses and the number of people falling within the scope of the Bill will be the number of claimants. That number will depend on the rates and tapers, information which, despite the valiant and ultimately fruitless efforts of the hon. Member for Northavon, 
 the Paymaster General kept a jealously guarded secret during last week's debate—I suspect that she will not change her mind this week. 
 Depending on the generosity of the Treasury, the number of claimants could go up, putting an additional burden on business as every new claimant registers as a transaction cost. Ministers are forcing a cost on to small businesses that is ultimately unpredictable and unquantifiable and is entirely dependent on the Government's policy objectives.

Jim Sheridan: I thank the hon. Gentleman and his hon. Friends for this nostalgic trip back to the dark days of his Government, whereby any legislation enhancing the life of people in the lower quartile of our society suddenly becomes a burden on businesses. The hon. Member for East Devon (Mr. Swire) said that the working time directive is a burden on industry. It is ridiculous in this day and age to say that about legislation that allows workers to work for less than 48 hours a week or sets a minimum wage, which takes people off benefits so that they do not need tax credits. It is nostalgic rubbish.

Mark Hoban: I am grateful to the hon. Gentleman for his intervention. All that we are suggesting is that by shifting the burden from employers to the Inland Revenue, his Government can still achieve their objectives in terms of alleviating poverty and improving work incentives without imposing the cost on business. That is a reasonable position to take.
 Payroll processing costs on small businesses are significantly higher than those on large companies. A business with between one and four employees incurs an average cost of £288 per employee, but for a large company employing more than 5,000 people it falls to £5 per employee. In small businesses, the payroll is often done by the owner-manager, a bureau service or the company accountant. Significant costs may be incurred, as well as a significant distraction in terms of time from the valuable task of job creation and wealth creation to which my hon. Friend the Member for East Devon referred.

Hugo Swire: I am grateful to my hon. Friend for pointing out that we are not necessarily opposed to the list that I mentioned, but to the idea of small businesses, rather than the Government, being responsible on those occasions. Further to the burden that he is describing, does he see any difference between the 7 million people who are paid weekly and the 16 million who are paid monthly?

Mark Hoban: It depends on how the payroll is compiled. In the case of an automated payroll system it probably does not matter if it is weekly or monthly, but where it is compiled manually, as it is in many small businesses, costs may arise.
 My hon. Friend talked about the additional burdens that are placed on businesses by the earlier legislation to which the hon. Member for Northavon referred. A business with just one employee, perhaps a self-employed person operating as a sole trader, may, when 
 faced with the administrative burdens that arise from employing another member of staff, wonder whether it is worth while. Some of the costs that are imposed, especially those of processing and administration, may act as a barrier to further recruitment, thus diminishing the number of opportunities for people to move from unemployment into work, which is the Government's objective in introducing the tax credits system. Shifting the burden of paying tax credits back to the Inland Revenue might make it more attractive for small businesses and small traders to recruit more members of staff to grow their business and create the wealth and jobs that the country needs. Time and again, the Government have imposed burdens on business, and the amendments present an opportunity for them to relieve small businesses of a burden that could have big effect on the lives of those who run them. 
 There are three solutions to the problem of imposing additional costs on businesses. The first, to which my hon. Friend the Member for Arundel and South Downs referred in his opening remarks on the amendments, is to move to a negative income tax so that there is only one coding to process, not the standard PAYE coding and a separate piece of paper for the tax credits. I will be interested to see how the Paymaster General responds to that, because to have only one coding to process, not two as at present, would be a very straightforward way for an employer to reduce the initial transaction costs. 
 The second solution, which the CBI suggested yesterday in its briefing to the Committee, is to compensate employers fully for the cost of administering tax credits. There is much merit in that. It would meet some of the objections of small businesses, but would impose an additional burden on them because they would have to submit a claim form and get a cheque back from the Revenue to meet their costs. I am also uncomfortable about it because it would not remove the time burden of payroll costs from small businesses. I would rather that the time burden of complying with the measure was pushed back on to the Inland Revenue. 
 The third solution, which I favour, is direct payment to the claimant, as the amendments suggest. The Paymaster General has already said that child credits will be paid directly to the main carer by the Inland Revenue, so it would require a relatively small extension of the system for it to cover childless couples in receipt of tax credits. I do not see that implementing that would be onerous on the Inland Revenue. 
 When there has been discussion on that idea, the Government have argued that it would break the clear link between the incentive to work and joining the work force. They might use that argument on this occasion, but the very process of leaving jobseeker's allowance to move to the working tax credits, completing additional paperwork and submitting the forms, would show clearly to the claimant that a change had arisen solely because of their movement from being unemployed to being in work. That 
 change, together with the extra line on their bank statement marking a payment from the Inland Revenue, would demonstrate the incentives again. 
 I am not sure that the Government are right in saying that the proposal would act as a disincentive for people to move from benefits into work. The IFS report states that the Government also hope that 
''as a tax credit rather than a welfare benefit, it should reduce the stigma associated with claiming in-work support, and encourage higher take-up''.
 However, the IFS concludes: 
 ''There is no evidence, though, that payment in this way improves work incentives or reduces stigma''. 
The evidence collected by the CAB suggests that payment through the wage packet caused substantial difficulties for some recipients of working families tax credit, especially if employers refused to pay, or refused to increase hours above 16 a week so that people could not claim the tax credit. There are some significant problems still arising on the payment of tax credits through the payroll by employers.

Hugo Swire: What my hon. Friend says on that point is entirely true. He no doubt remembers the case of the lone mother with three children who lost her job when the tax credit was actually put in her pay.

Mark Hoban: Yes. We must recognise that those incidences are regrettable, and that employers should not do such things. However, from time to time employers are in situations in which they do not wish to incur additional costs.

Dawn Primarolo: The hon. Gentleman is making a very important point. I am sure that he will agree with me that the overwhelming majority of employers fulfil their obligations, and the situations that he mentions do not arise. In the particular case raised by the hon. Member for East Devon, we keep asking for information to pursue the case to see whether an issue was not dealt with in legislation, but unfortunately we still do not have details from the organisation that reported it or the individual that would allow us to ascertain the facts. The legislation protects the employee in those circumstances, and we expect it to be used.

Mark Hoban: The Minister is right to say that the vast majority of employers deal with such matters properly. However, we should not use that argument to ignore the fact that some employers do not, and we should consider ways of minimising the impact on claimants. That is why I believe that moving to direct payment by the Inland Revenue will not only reduce the cost for business, but remove stigmatisation and discrimination against employees who apply for tax credits.
 So far, comments have primarily related to the annual running costs of the tax credit system. Additional costs will arise from the Bill. The move from six months to 12 months will require adjustments to the wages software used by companies. Even the regulatory impact assessment points out that, although the number of employers will remain unchanged, different employers will have to process 
 tax credits under the new arrangements compared with previous arrangements. Rather than take another batch of employers up the learning curve of implementing and administrating the regime, and allay their anxieties about the incurred costs and the changes that all employers will have to understand are a consequence of the legislation, the Government should accept the merits of moving to direct payments from the Inland Revenue, as they have done for child tax credits. Once and for all, that would lift the burden from small businesses, which are often the motors of the economy in constituencies such as mine. Administrative burdens often needlessly distract them from their valuable job of wealth and job creation.

Peter Luff: Following your response, Mr. Hood, to my point of order at the start of the sitting, I rise to make the obvious point that I do not believe that regulations are always wrong. Often, Government must rely on regulation to allow for the flexibility to interpret primary legislation. However, clauses 23 and 24 contain largely regulation-making powers, so I will ask what, from now on, may become the usual question to the Minister. Is she satisfied—she probably is, but I want to hear her say so—that she needs to rely on the regulatory powers of the two clauses? I anticipate, Mr. Hood, that you will probably not allow a separate clause 23 stand part debate. Is the Minister also satisfied that they should go through the negative, not the affirmative, procedure?
 I will not debate post offices either because they can be debated under the Liberal Democrat amendment in the next but one group of amendments. However, I associate myself with what the hon. Member for Northavon said. My substantive point relates to poverty, how we fight it and the trade-offs that we engage in. Along with my hon. Friend the Member for East Devon, I was glad that a sense of the need to fight poverty is shared across the Committee. It was tremendous to hear the authentic voice of old Labour raised by the hon. Member for West Renfrewshire (Jim Sheridan). He used the phrase ''nostalgic rubbish'', which I throw back at him. We must engage in serious debate about trade-offs. If legislation and forcing employers to do things could end poverty, they would have ended it years ago. However, we must think carefully when the Government invite us to impose or change a burden on a group of people in society in the name of a good cause. Cliche after cliche comes to mind, but the road to hell being paved with good intentions is probably the most obvious. I have two more to offer before I sit down. 
 I remind the hon. Member for West Renfrewshire that the Conservative party needs no lectures on fighting poverty. The Conservative party began employment protection in the 19th century. [Interruption.] The Minister laughs, but she is showing a shameful ignorance of history, which is uncharacteristic. It is the Conservative party's proud record of industrial and social reform that led to me becoming a member.

Dawn Primarolo: I was not laughing; I winced at the hon. Gentleman's suggestion that the Conservative party has a fine and long history in this area. I accept that Winston Churchill advocated a national minimum wage, which this Government introduced. However, if we examine the statistics for the growth in child poverty under the Conservative Government, I am sure that the hon. Gentleman would not suggest that the figures showed that they were tackling poverty. The reverse is true because they presided over a massive growth in poverty.

Peter Luff: The Minister tempts me into avenues down which I would dearly like to go, but I suspect that you would become impatient, Mr. Hood. Suffice to say that names such as Wilberforce and Shaftesbury are written proud in the history of the Conservative party. Some of the work done on relative poverty under the previous Conservative Government was discredited afterwards because it ignored various issues, but I shall not go into that because I do not want to waste the Committee's time.
 When we debate poverty, and the Tax Credits Bill's approach to fighting it—clauses 23 and 24 lie at the heart of the mechanism that the Government propose—we must ask whether the balance is being struck appropriately. I must say that this is the one issue in relation to the Bill on which I received lobbying from my constituency, which is why I am speaking. The Herefordshire and Worcestershire chamber of commerce shares many of the concerns that my hon. Friends raised in their earlier contributions. It reminded me that the problems of small businesses in Worcestershire must be addressed with particular rigour by the Government because 84 per cent. of them employ 10 people or less. It points out that the proposals in these two clauses will be easier for large companies with large human resources departments to cope with than for small businesses. 
 The CBI's briefing, which has been alluded to on several occasions in the debate, is interesting in that respect. The CBI reaffirms its principled support for what the Government are trying to do in the two clauses and the Bill, but it states: 
 ''If there is no possibility of administering the tax credits system within the Inland Revenue, employers should be compensated for the administrative costs associated with running the scheme . . . Small employers, in particular, will welcome the support offered by paying administrative costs. These employers have reported to us that they are struggling under an increasingly heavy burden of payroll administration. The Better Regulation Task Force has also indicated their concern at the possible effect of the tax credits system on small employers.''

Karen Buck: The hon. Gentleman is making a serious point, but those same organisations, the chambers of commerce and the CBI, also issued apocalyptic warnings about the impact of the minimum wage. Before its introduction his party told us that it would cost 1 million jobs, but the history of its implementation has been the reverse of those dire predictions.

Peter Luff: I shall not get on to the minimum wage because you would rule me out of order, Mr. Hood. Suffice to say that the level at which it was set meant that it did not have the apocalyptic consequences that it would have had if it had been set at the level preferred by some of the hon. Lady's colleagues in the trade union movement. I could have a longer debate about that issue, but you would rightly call me to order if I tried to do so, Mr. Hood.
 Businesses in Worcestershire are concerned about the Bill in general and these two clauses in particular, and the Minister cannot dismiss their concerns lightly when she responds to the debate. The Herefordshire and Worcestershire chamber of commerce points out that smaller businesses are typically run by owner managers who are skilled in doing whatever that business does, but not skilled at being tax collectors for the Government. It says: 
 ''Credits paid out are deducted from amounts the employer pays to the Revenue, where the employer is owed money then this could aggravate a weak cash flow position.'' 
She shakes her head, but I hope that she will address that point. I look forward to hearing what she has to say, because that is a real fear of businesses in Worcestershire. 
 I remind the Minister that when the Small Business Service was established it identified the fact that payroll management was a weakness in many small businesses. Many small businesses were worried because they thought that the Government were getting into the business of providing payroll services, but that was not the case. The Government were trying to encourage small businesses to examine solutions to payroll problems, such as better use of modern software. The fact that they recognised through the Small Business Service that small businesses needed practical help with their payroll should make us think carefully about these clauses. 
 The chamber of commerce says: 
 ''Administering certain benefit credits through the payroll means that some employers may know more (perhaps only in general terms) about the family circumstances of employees than either would wish. The business will often be a small group of three or four people working very closely together. It may be the case that they do talk about family matters and are aware of each other's circumstances. However that is different to having to make one's employer aware of personal circumstances. It is also one of the differences between the large and the small employer. In the large employer there is often more ''distance'' between the individual concerned and the payroll administrator who may not know all the individuals concerned anyway.'' 
 The Government must address the issue of privacy and intrusion. The suggestion to delete clause 24 is welcome for the sake of the individuals whose privacy is threatened. The Government often think in terms of big business. They talk to big business but they do not understand the dynamics. It is not a criticism but an observation. They have not been involved in small business and do not understand the difficulties that this well-meaning legislation causes these companies.

Mark Hoban: If a number of employees who all have the same skills compare their wage packets, they may find that one gets significantly more than others
 because of his family circumstances and the way in which the tax credit has been processed. That may confuse employees about their value to the employer and cause discontent among the work force.

Peter Luff: That is a powerful point that I had not properly considered until now. I used to run a medium-sized business. One of our real difficulties was precisely that: people comparing pay packets and reaching judgments about their work. It is an immensely difficult problem in a small business, which typically wants more flexibility in setting its pay rates than some larger businesses operating to agreed pay scales.

James Clappison: Those who are interested in this important aspect of the payment of the tax credit through the employer would do well to study the speech on Second Reading by the right hon. Member for Birkenhead (Mr. Field) in which he set out the conclusions of his research into the effect that such information leaking out has on the work force as a whole.

Peter Luff: I am grateful to my hon. Friend for prompting my memory. I hope that the right hon. Gentleman will be able to express some of his concerns on Report.
 Another issue is fraud. I am sure that my hon. Friend will mention that later, but it is an important part of these two clauses. The chamber of commerce says: 
 ''Collusion between an unscrupulous employer and employee could lead to an agreement to pay a deliberately low wage and make the amount up through benefits.'' 
That was another point made by the right hon. Member for Birkenhead. With the greatest respect to the hon. Member for West Renfrewshire, these powerful points are not nostalgic rubbish. They are highly contemporary points about how we conduct the fight against poverty. The Government are quite cavalier in their regulatory impact assessment. They say that the implementation costs should be less and that existing payroll systems should not need to be significantly altered and they give lots of unconvincing reassurances. Even it the costs are a little less than those of the present system, which causes deep concern among employers in Worcestershire, the opportunity should be seized to make them considerably less. Marginal changes are not good enough. 
 A market gardener in my constituency told me a year or so ago that as soon as he got to spending more than half his time doing Government paperwork and less than half his time growing, he would give up market gardening. He was getting perilously close to that point. I say again to the hon. Member for West Renfrewshire: this is not nostalgic rubbish. This is people fighting on a day-by-day basis in highly competitive markets who need every opportunity to create jobs. We are not talking about wicked employers. These small businesses usually have a good relationship with their work force and want to help them. They are anxious to give them time off and provide them with any moral, physical or spiritual assistance that they can, because it is a small team 
 pulling together. They want to create more jobs and to employ more people. The Government must make it easy for them. 
 I should like to remind the Committee of just two more cliches. The first is willing the end but not the means. The Government are willing the end of poverty but not the means to fight it. The second, and more important, is killing the goose that lays the golden eggs, which is what the Government are in danger of doing. Many small businesses in my constituency face intense market pressures and look with dismay at the rising tide of regulations—and I refer to my original point of order. I hope that the Government will not dismiss their concerns as being those of wicked employers who want to grind the faces of the poor. They are caring, compassionate people who want to help their employees and employ more people, but could be denied the chance to do so by measures such as these.

James Clappison: This has been an important debate on an important part of the Bill. We have had some significant contributions from Conservative and Liberal Democrat Members, and we are all grateful to the Minister for the way in which she has assiduously listened to them. She will give us her considered response shortly. I was interested particularly in her recognition that employers were complying with the provisions. She nods at that, and we remember the National Association of Citizens Advice Bureaux survey on which those assertions were based. The recognition will be useful to bear in mind when we reach later provisions in the Bill. Given that she believes that employers are complying so well, we shall push for easing the burden on employers and securing a little more flexibility for them, although that is for the future.
 The payment of tax credits is an important subject, and I will add the perspective from my constituency. My hon. Friend the Member for Mid-Worcestershire (Mr. Luff) talked about Worcestershire. Manufacturers in Hertfordshire are no different and encounter the same problems of having to comply with an ever growing regulatory burden that causes a distraction and in some cases leads to a reluctance to take on additional labour. 
 The hon. Member for West Renfrewshire must understand that we are not saying that trying to alleviate poverty is a bad thing, but when one does it in a way that causes additional burdens for employers and undesirable side effects, one must look at whether it is a good way of operating. My hon. Friend the Member for Arundel and South Downs was right in his comments and asking whether the Bill provides for the best way of making the payments available to workers on low pay. 
Jim Sheridan rose—

James Clappison: I will give way to the hon. Gentleman, but he may want to hear one fact first, because I know that he is concerned about this. Manufacturing industry, in particular, cites the system as one burden on it, especially on small and medium-sized employers. The background to that is a massive
 job loss in manufacturing industry of 350,000 jobs since 1997, accelerating last year to 111,000 jobs. Hon. Members are looking puzzled at that. The figures are not from employers.
Ms Buck rose—

James Clappison: I will give way to the hon. Lady as well, but she may want to reflect on the fact that those figures come from the GMB, which is running a campaign to draw attention to the fact that one manufacturing job is being lost every minute.

Jim Sheridan: I do not suggest for a minute that running a small business is easy, and I have some sympathy for people who do it, because of the difficulties that they face. Does the hon. Gentleman accept that beneficiaries of tax credits work for companies such as McDonald's and Burger King and contractors that work for local authorities? By no stretch of the imagination are McDonald's or Burger King small companies.

James Clappison: We can reach common ground to the extent that paying working families tax credit through the payroll is more of a burden to small employers than it is to large ones. Many small employers, from my constituency and other parts of the country, have told me that it has an important effect on their administration costs and, cumulatively with other burdens, can govern their decisions about whether to take on more workers or lay off some that they already have.

Karen Buck: I was not doubting the figures that the hon. Gentleman cited, which I am prepared to accept, but I want to quibble about the fact that he said that job losses in the manufacturing industry are due to the administrative burden of the working families tax credit. I do not think that, with some of the serious problems that British manufacturing has faced, such as the strength of the pound, it could be said that the working families tax credit has been the problem. He and his colleagues have also made a great deal of the issue of small businesses. I do not think it would be fair to say that job losses in manufacturing industry have been predominantly in small firms.

James Clappison: I agree with the hon. Lady to the extent that, to be fair, this is part of the wider economic background. I part company with her on the emphasis that I place on the effect on small and medium-sized enterprises. The burden on them increases the marginal costs, particularly for small and medium-sized employers, and affects the decisions that they take.
 One manufacturer who had employed about 50 workers but recently downsized to 44, leaving the machine room empty, said to me, ''Given the amount of regulation that I have to comply with, why should I employ another soul?'' That is the feeling of many manufacturers. That manufacturer was not in my 
 constituency, but I have been pressed by small and medium-sized manufacturers in my constituency on this point. 
 I am not saying that tax credits alone, or the administration of student debt, or the stakeholder pensions, or any of the rest, are the problem in themselves. It is the cumulative burden of regulation. That is why we need to have important debates such as this, to examine each and every piece of regulatory burden that is placed on employers and consider whether yet another element of burden is justified, and to put some sort of cost on it. 
 I now come to what the industry itself says about this matter. The Government's regulatory impact assessment assures us that there will be a reduction in the burden placed on employers. They are trying to make a virtue of that. They have suggested a figure of £11 million a year for the reduction of costs for employers, but we must consider that against the background of a current burden of about £90 million to £100 million, so we are talking about only a relatively small part—about 10 per cent.—of the present burden. 
 It is not clear that the reduction really will be of that order in any case. Of course, the Minister has been at great pains to say that she does not yet know, because—properly, in her view—she is not prepared to disclose to the Committee her view on the tapers and the rates at which the benefit will be set. We cannot say exactly say how many new people are coming into the system. We know that people who have been receiving the child tax credit allowances have been going out of the system, but a whole new group of people in childless households will be coming in. We do not know exactly how many there will be. 
 Looking at the mechanics, the Government's regulatory impact assessment set out the ways in which the burden will be reduced: they think that employers not having routinely to complete an earnings inquiry form will save them about £1 million a year; the move towards annual awards about £9.5 million; and certificates of payment about £400,000. 
 I am slightly hesitant about this, because the Government do in fact say that there may be an increase in the regulatory burden as a result of some of the changes that are being made. Paragraph 2.17 of the regulatory impact assessment says: 
 ''The only change that might generate a cost for employers is that some employers might be asked to adjust the value of tax credit payments to a worker within the year, as the new tax credits system will respond to in-year changes in recipients' circumstances. The impact of this can only be estimated once the system is up and running and so will be assessed as part of the evaluation of the new tax credits.'' 
I can understand the justification that has been offered, but I am a little hesitant about regulatory impact assessments that cost the reductions but not the increase. We need to hear more from the Minister about that, even if it is only a ball-park figure. 
 Industry itself is concerned about this. In the submission that we have received from he CBI, it specifically states:
 ''Employers will need to change the payment rate if an employee notifies the Inland Revenue of a change in circumstances and this may even require the payment of different rates in one pay period.'' 
The CBI proposes that as a main justification for seeking the payment of administrative costs, which we will deal with under another clause. There are clearly swings and roundabouts to all this, in that there will be reductions and increases in the administrative burden. As a result of the changes to the tax credits, some people will not be paid by employers, and others will be paid for the first time. We cannot gainsay that overall a substantial burden on employers will remain. My hon. Friend the Member for Arundel and South Downs is right to table amendments that question whether such a burden should be placed on employers. We should also ask whether there are other ways of paying tax credits that would not involve that burden. 
 I share the scepticism of the hon. Member for Northavon about whether paying the tax credit through the pay packet would have an impact on employees, rather than paying it in another way. The Government seem to have adopted that argument to some extent, because they now propose to pay the child part of it in a different way and not through the pay packet. I doubt whether that makes enough of a difference to justify imposing the burden on employers, although the Government claim that it does. The burden on employers is substantial and cumulative, and affects many employers in my constituency. We need to consider the proposal urgently, given the job losses especially in the manufacturing sector, and it is right that we have considered it in the debate.

Dawn Primarolo: The hon. Member for Hertsmere spoke about swings and roundabouts. I would put it more in terms of balance. Although I appreciate the importance of ensuring that requirements and obligations on business are reasonable, the arguments so far have been one-sided and isolated from a wider set of changes that the Government are making with regard to facilitating the efficient and productive operation of large and small businesses. The Government's preoccupation in considering changes in legislation was not shared by our predecessors.
 The CBI brief has been widely quoted in the debate. It states: 
 ''The CBI supported the introduction of the tax credits system, including paying via the pay packet, as a valuable way of incentivising work. In that context, it also supports the extension of the principle of tax credits to employees without children.'' 
That is the CBI's principled position. 
 The debate has been long. I am more than happy to give way to the hon. Gentleman, but I should put more of my argument on record.

Hugo Swire: Will the Minister give way on that point?

Dawn Primarolo: If the hon. Gentleman allows me to finish my next point, he may find that I have answered his question. If not, I shall give way to the hon. Gentleman with great pleasure.
 I deal with negotiating positions in the tax system all the time, so I am aware of the issue. I am sure that all Committee members and those watching or listening to our debates recognise that a good negotiator always seeks to get a little more. As hon. Members have said, the CBI makes the point that it would be nice to be paid. Indeed, the general thrust of representations to the Government from businesses large and small is that it would be nice not to pay any tax and if the Government left them alone to get on with their businesses. 
 However, that is not how the world is. In a changing Britain, there is a partnership between Government, business and employees. By ''Government'', I mean the public sector as a whole. We must recognise the contributions that are necessary to support the various provisions in our society. Education, training and development contribute to the productivity of business. We must also recognise the aspirations of our communities. In striking that balance, the Government must ask how that partnership can be advanced and what we are doing. The CBI recognises that the incentivisation of the work force is important, particularly given that, in 1997, when the Government were elected, they had to tackle what many described as structural unemployment and underskilling. 
 I was interested to hear the hon. Member for Arundel and South Downs say that wages always equate automatically to productivity. Quite a lot of people in Britain would dispute that point when they consider what they do in their workplace and their remuneration. 
 Let us consider the responses made by other employer organisations in the consultation process, which have been placed in the Library.

Hugo Swire: The Minister kindly agreed to give way if she did not address my point in her opening remarks and she has not. The passage that she quoted from the CBI brief continues:
 ''Nevertheless, employers are concerned at the rising burden of payroll administration and their growing role as paymasters of the benefit system.'' 
On the Minister's second point, I ask her to address the concerns not necessarily of the CBI, which on the whole represents big business, but of organisations that may be more connected to employment in smaller businesses, namely the Federation of Small Businesses and even the Institute of Directors.

Dawn Primarolo: I was coming on to the attitudes of the type of organisation that the hon. Gentleman identifies. As a caveat, I should point out that the argument on tax credits is not new; it has been advanced against the collecting of tax and national insurance through the PAYE system, which is extremely efficient, since it was instituted. As I said, I understand that that is a negotiating position. With regard to the work that I as a Minister do on tax credits and the tax system, I entirely accept that pressure should remain on Ministers to examine the potential benefits, where the regulatory burden falls and what
 we can do to alleviate that, in the round and specifically. With your agreement, Mr. Hood, I would like to touch on that.
 I referred to the CBI briefing. During the development of the working families tax credit, the disabled person's tax credit and the new tax credits, we have worked closely with employer organisations and considered the points that they raised. If we consider the impact of the working families tax credit, we can understand the size of the burden on small employers, on whom the greatest burden will fall. We anticipate an increased requirement for work of six minutes a week, if employers did their calculations manually with the tables. That requirement brings the benefits of retention of staff, commitment, and the other benefits that tax credits will bring. When people refer to the economic cost to the employer, are they just considering the costs, or are they pricing the benefits? 
 The Institute of Payroll and Pensions Management welcomed 
''the beneficial changes from the employer's perspective''. 
In its detailed response it recognised 
''all the positive changes to the administration of tax credits that will benefit employers.'' 
I would not wish to mislead the Committee. Those comments are tempered by the comment that it will need to evaluate 
''the responsiveness of the new system''. 
I was pleasantly surprised to receive the following response from the Institute of Directors, which 
''warmly welcome the ending of the requirement of certificates of payment and we strongly support automatic increases in funding when new employees become entitled to tax credits.'' 
The Association of Convenience Stores supports 
''the Government's proposal to reform the existing system of tax credit payments and believes that this will go some way towards easing the problems faced by members at present.'' 
It went on to say that 
''the decision to move to annual assessment and payment cycle will mean an end to the stop start nature of current payments and immediately remove the administration associated with regular changes to an individual's payroll.''

Steve Webb: No one would question that the Government have reflected on the problems of administering the working families tax credit through the pay packet, and streamlined that process. That is welcome and we should acknowledge it. The Minister says that we have talked about the costs, not the benefits. However, it seems to me that the benefits are about giving low-paid workers more money, which can be done through their bank accounts. The benefits do not depend on payment through the pay packet: employers could have the benefits without the costs.

Dawn Primarolo: With respect, the Government and the CBI do not agree with the hon. Gentleman, neither do other employers and organisations that contributed to the extensive consultation exercise on the new tax credits and in the development of others. It is important to ensure that work pays, that people keep
 more as they earn more and that we help them through the transition. Payment through the payroll provides for that.
 The hon. Gentleman mentioned help for small and large employers. I acknowledge that when people receive a new benefit, they pocket it and ask for more. Everyone does that; it is what negotiations are about. However, I remind the Committee of changes that the Government have made to help small and large businesses: reduction of corporation tax; abolition of advance corporation tax; changes to streamline the national insurance system and make it more efficient, particularly for small businesses. We revised the thresholds for quarterly payments of PAYE and tax, ensuring a better cash flow position. We asked the small business service and the Inland Revenue business support teams specifically to look at how we can help small businesses. 
 The Carter review, which examined payroll services, has been mentioned. It dealt with the benefit to small businesses of using e-commerce and the internet. The Carter report indicates that there would be huge benefits for business and Government if small businesses could be encouraged to use and develop technology. We would have clean data, which would allow us to reduce burdens on business, and businesses would become more responsive.

Richard Younger-Ross: The Minister made it sound as though the burdens on business were not too onerous. Many self-employed people wish to expand their businesses and take on staff, but the mountain of paperwork stops them taking that further step. Can we not make the burdens lower for new businesses?

Dawn Primarolo: In everything that we do, there is a difference between perception and reality. People may perceive something as a huge problem—that might act as a brake—whereas, if they were fully informed, they would not. We work with employers to ensure that all the information is available. [Interruption.] The hon. Member for Mid-Worcestershire says from a sedentary position that that is extraordinary. I shall give way to him in a moment.
 The Government have done a huge amount of work to determine how to reduce burdens. They are looking for ways to achieve objectives on incentivising people to move into work and how that can best be rewarded, while constantly keeping in mind the requirements placed on business. I have explained what the Government have done so far, and I now wish to discuss how the Bill will reduce the burdens further. 
 When hon. Members discuss the Bill, they isolate it from other Government actions to benefit and assist employers and employees. They should consider it in the context of the Government's strategy.

Peter Luff: For the Minister to dismiss the concerns of small businesses, like the one raised by the hon. Member for Teignbridge, as ''perceptions'' is remarkable. They have these ''perceptions'' because their fellow small business men tell them these things.
 It is not perception it is reality that these people are confronted with and that is why they are reluctant to expand.

Dawn Primarolo: I certainly did not intend to suggest that it was not important. It is very important. People's perceptions are as important as the reality because, as the hon. Gentleman suggests, otherwise they do not move on. It is part of the educational role that we need in working with employers and getting information to them to ensure that they are fully aware of the reality and that we can get that message to them. As individuals, we are all familiar with that problem because our own understanding may sometimes not be what it should be.
 I am being extremely careful in this important debate to put it in context and not to undermine real concerns that need to be addressed, and I hope the hon. Gentleman accepts that.

Richard Younger-Ross: When people are starting out to build a business, they see it as building an empire. Some have a small hill that they wish to build, some a small mountain range and some think that they can build a business the size of Mount Everest. However, the perception of climbing a mountain is that one starts on gentle slopes, but it gets harder as one climbs higher. Having a heavy burden of taxation and regulation to start with is like coming to a cliff face that is hard to ascend. If regulations are simplified at the early stage, they can be started on the foothills, enabling climbers to get to the top of the mountain.

Dawn Primarolo: I agree with the hon. Gentleman's point about a system that navigates through the foothills to reach the peak. The new tax credits are available to the self-employed, as were the working family and disabled tax credits before them. The information that we have is that one of the benefits, particularly for those starting up their business for the first time—they may have been unemployed and be moving into self-employment—is that the tax credits have provided, and will continue to provide, a crucial certainty for them to calculate in the development of their business.
 I accept the issue about helping small businesses to navigate the growth of their business and the first point I make is that the tax credits can assist people in starting up and taking decisions to move into their own business. We are seeing that within the current system. 
 The sort of things that are already in place, and that would continue, are free help and support, principally for new and small employers; dealing with requests for information; working with them to look at their responsibilities; payroll; and making sure that advice is given at the beginning to ensure that they are fulfilling their obligations in the most efficient way. This support is provided through a range of workshops, internet sites, direct communication and, of course, the one-to-one new business support, which is a mentor system. All this is specifically directed at the point that the hon. Gentleman makes, which is how important it is that that information is available, easily understood and accessible to overcome some of the issues that he has identified.
 In explaining the Government's approach to recognising the requirements and obligations on business, we should consider the tax system and not just the tax credits. The Committee will see that the arguments about why the Government continue to be committed to that principle follow exactly what the hon. Member for Northavon said. We had this discussion before. The Government argued the case for paying working tax credit through the pay packet and remain convinced that that is the correct way to proceed. 
 When the Revenue notifies employers to pay their employees the working tax credit through the payroll, they will not be required to assess the amount of the tax credit to be paid. The Revenue will do that, and will tell employers when to start paying it. Employers will be given at least 42 days' notice to adjust their payrolls. Hon. Members asked about variation and where employers may move to a current year assessment. The Revenue would need to be satisfied of two issues. Having decided on the new payment, employers would be given the 42 days' minimum notice to prepare their payroll. There should also be at least three consecutive periods in which the tax credit could be made. 
 Employers will fund the tax credits from the PAYE tax and national insurances contributions, which they already collect, and pay the Inland Revenue monthly or quarterly in arrears, as is currently expected. If the allowances are expected to be insufficient, the employers will not be expected to pay the tax credit from their own cash flow, as is the case with working families tax credit. They will apply to the Inland Revenue for payment in advance of the difference between what was collected and what will be paid. While the annual assessment runs for 12 months, the payment pattern will be clearly notified to the employer in advance and the employer will receive the money. The employer will give additional information on the tax credit payments. Their year-end returns, which they already make for the purposes of PAYE and national insurance, will also account for the total tax credits paid.

Peter Luff: On a point of information, it took about three months recently for me to get a refund from the Inland Revenue. What is the experience in practice of the mechanisms that the Minister is describing? Have there been complaints from employers about slowness in making the compensatory payments that she identifies?

Dawn Primarolo: I am not aware of any complaints. There is a specific period in which the payment must be made to the employers to ensure that they have received funds before they start paying. That period does not spring to mind, but I am sure that I will have that information for the hon. Gentleman before I sit down, and I will reply to his question before I conclude. The only caveat would be if the employer knows what the expenditure is but does not apply in time. If employers leave it until the day before they are due to pay their employee, there will be problems in ensuring that they had funds available at the time. There is a period within which the employer should
 receive the funds. This is how the system operates now, and we have not experienced any substantial difficulties with it. However, I cannot put my hand on my heart and say that in the hundreds and thousands of cases there might not have been one where something went wrong.

James Clappison: The information that the Minister promised my hon. Friend the Member for Mid-Worcestershire may or may not be available before she sits down. However, will she undertake to make it available before we reach clause 31, where these issues become very important because employers are subject to a regime of strict liability for failing to pay tax credits.

Dawn Primarolo: Indeed. Many of the powers in the Bill have been carried forward from preceding legislation on working families tax credits. That it works well is in no small part due to the fact that it is buttressed by a number of reminders of the consequences of non-compliance.
 I can now answer the question from hon. Gentleman the Member for Mid-Worcestershire. The caveat is that employers must apply in time. If they leave it to the last minute, which no one appears to be doing, there will be problems. The employer will have to have the payment at least three days before it is due to the employee. By this, I mean that employers must have money available before payment is transferred to the employee. 
 We are not aware of any complaints that have been made to us, claiming that this system is not work, or that it does not assist the employers. Obviously, when the arrangements have been known for 12 months, it is a straightforward transfer. It also depends on the time of the pay period. We are talking about transferring the tax credits from the employer three days before the employee's pay period. 
 Although the general framework is familiar to employers and, as I have said already, they are using it, we took seriously the comments that were made with regard to working families tax credit. We sought, in designing the new tax credits, to go further in the legitimate requirements for employers. We have managed to do this in four main ways. First, claimants will not routinely have to ask their employers for verification of earnings, which is what happens in the current system as we normally work from the previous year's income, which is based on the P60. 
 Secondly, if an employee receiving working tax credit leaves the employment, the employer will simply stop paying the tax credit. There will no longer be any need for the employer to complete a certificate of payment, as is currently the case. The fact that it is a fixed award will also make a difference. If the employee remains entitled—and that will be obvious because of the fixed 12-month award—it is their responsibility to tell the Revenue the identity of their new employer. The engagement is then made with the new employer.
 Thirdly, because the new tax credits will be awarded annually, there will no longer be the six-month stop and start. That was a troublesome feature which employers wanted to be changed. Finally, the application procedure for employers who need funding has been simplified. Employers will apply at the beginning of each tax year, and the Revenue system will adjust the funding amount paid to them if there is a change in-year. Payments will be made to employers in advance, so they will have certainty. 
 The Government are not prepared to concede the principle of payment through the payroll, but I hope that I have shown that we continue to consider ways of refining the system and reducing the burden. All the amendments, however, are concerned with not paying the money through employers. 
 Amendment No. 94 would remove the power to make regulations requiring employers to pay tax credits to their employees. It would make it impossible for payment to be made other than by the board of the Inland Revenue. I have explained why the Government are not attracted to that. It would be odd to amend a clause so that it did not do what it was supposed to, but still to leave it on the statute book. The amendment would be a way of removing clause 24. 
 Amendments Nos. 36 and 37 would provide that employers had to receive payment of the full economic cost of paying the working tax credit to their employees through the payroll. I think that the hon. Member for Fareham (Mr. Hoban) touched on the relevant point and I shall not elaborate on it, because Committee members will appreciate it immediately. The Government are not attracted to the proposition. We believe that we should look elsewhere to reduce burdens; there are trade-offs. There would have to be a complex system to calculate the economic cost, which could increase the burden on employers, particularly small employers. A complex formula as to what was and was not counted in the calculation would have to be written in legislation. Attempting to create such a system would aggravate the complications that hon. Members seek to alleviate. 
 As I said initially, it is incumbent on the Government to reduce burdens, streamline the system and support small and large businesses alike. Part of that is ensuring that those businesses flourish in parallel with the development of the work force and the Government's objectives on full employment. 
 Amendment No. 51 would allow employees to ask for payment to be made into an account, which would be against the principle of payment through the wage packet. I can only repeat what I have said in this and previous debates: I understand the point made by the hon. Member for Northavon, but the Government do not agree with it. 
 Amendment No. 35 would remove any reference to the sort of provisions that may be made in regulations under clause 24. I am puzzled as to why hon. Members should propose such an amendment when they have argued that the provisions should be included in the Bill. It goes exactly against what the hon. Member for 
 Arundel and South Downs has argued in relation to regulations. It is probably a glitch in the drafting of the amendment.

Howard Flight: The point is consequential on amendment No. 94, and if that were carried there would be no need for amendment No.35.

Dawn Primarolo: That is very interesting. Usually when hon. Gentlemen do not like a clause, they simply propose its deletion. It is quite unusual to table six amendments when one would have sufficed.
 We have had an interesting, long and important debate this morning, from which I am sure we will all benefit in terms of ensuring that the issues are on the record. 
 I have dealt with all the points that have been raised, although not always specifically referring to the hon. Gentlemen who have raised them. Finally, I return to the point about regulation as I know that the hon. Member for Mid-Worcestershire will not let me conclude without referring to the issue. Matters relating to payments being made through the employer and the ability to adjust those payments are exactly the type of issues that it is sensible to have in the regulations. They are subject to negative resolution. It is right that the fine detail should be set out in regulations. 
 Regulations under clause 23(8) are specifically about payments to accounts—we are rolling forward what had been done in previous years, although payment through the payroll is a new arrangement. This morning I listened to what the hon. Member for Mid-Worcestershire had to say, and I need to reflect on whether the Government can accommodate him in terms of how we process the regulations. If the hon. Gentleman gives me a little longer to consider how that might be done, I can assure him that by the time the Bill is considered on Report I will have come back with a suggestion on dealing specifically with his point of negative regulations. 
 On that basis I hope that I have responded to all the questions that have been raised although I do not suppose I have convinced Opposition Members of some of the principles. If they are unable to withdraw their amendments I will ask my hon. Friends to vote against them.

Howard Flight: I thank the Minister for her responses. On this occasion I was a little disappointed that she did not address a number of fundamental issues.
 First, it is one thing, where there is broad consensus, to argue that there is sense in paying people benefits in work in order to deal with the poverty trap. We started the process, the present Government have continued it and provided that it does not get out of hand there is consensus that it prices people into work. Making that payment, however, is quite another issue. 
 If I were the Minister, I would be suspicious of the fact that, as she rightly quoted from the CBI paper, many businesses like the payments going through the payroll, even though they would like to be remunerated for the costs. When not talking with Government, the Minister will find that many 
 businesses, particularly those in the low-paid service sector, like it because it represents a pay subsidy. As they see it, it saves them having to pay their employees more, which was one of our main worries about payments going through the payroll. The Minister will be aware of past examples in which wages were driven down by that attitude, with dire economic consequences. Let us not muddle the principle of pricing people into work to avoid poverty traps and the side effects of how to make such payments. 
 The several amendments were designed to make different points. After the Government's response to the Carter review, pointing to costs and implicitly suggested some help for small businesses, and the Chancellor's comment that the Government would examine the issue, I took the Minister's earlier comments as saying that they would not provide any financial help and that they were looking for some trade-offs.

Dawn Primarolo: The Carter report is not within the remit of this Committee, but if the hon. Gentleman examines its main thrust, he will see that in electronic transactions, the use of e-commerce was of huge benefit, not only in terms of communication between small and large businesses and the Revenue, but in terms of conducting business. It is necessary to take business forward, and Carter proposed that the Government should consider compulsion in respect of electronic communication with the Revenue, as well as ways to incentivise small employers to do that, perhaps initially by using of an intermediary.
 In the pre-Budget report, the Government said that all the recommendations should be out in the open. We saw the strength of the report's argument because it was about productivity. We asked people to comment on the issues by the end of this month. The proposed measure is much wider, encompassing productivity and interaction with the tax system as whole, but it could be of huge benefit. If accepted, it would require Government action.

Howard Flight: I thank the Minister for her comments. I am aware of the nature of the Carter report. She will be aware that the CBI and other business organisations pointed to the Carter report's coverage of this issue. The Chancellor's response in the pre-Budget statement was understood by commerce to mean that the Government would give it consideration, along with the other important matters that have been raised. However, I repeat that when asked whether the Government would consider it, the Minister's response was basically, ''No. No financial help; hoping to find some trade-offs''.
 Interestingly, although cash flow is important, it has not often been raised by business. The ''putting businesses in money'' arrangements have generally worked. The Minister did not respond to my questions about coding. She likes to quote the CBI, whose brief ends: 
 ''Over the long term, the CBI remains convinced that a technical solution''— 
that is, tax codes—
''is required, which will allow payments via the pay packet to administered by the Inland Revenue and bypass the need for employer intervention.'' 
It would be useful, not just to this debate but to the CBI, if the Government made it clear whether they have ruled that out for ever, and if so, why. 
 The amendment tabled by the hon. Member for Northavon raises a point that I also raised but to which the Minister did not respond. The evidence shows that individuals would prefer to be paid directly and have their tax credits sent to their bank account or the post office. That fact seems to be of no interest to the Government. They have made up their mind: whatever the worker wants, their position is, ''Hard luck, mate''. I cannot understand the reasons for their stance. 
 The Minister asked how I equate pay and productivity growth. That is simple: as night follows day, an economy will not get better productivity growth without getting more skilled workers. The question is how we get people to enhance their skills. Obviously, all sorts of training courses and improvements in education are needed, but at the end of the day, people must be motivated to want them. The strongest motivation is blindingly obvious: if people think that their pay packet will increase if they have more valuable skills to sell, they will work to enhance their skills. That fact is as old as the hills and, as I pointed out, it is recognised strongly and happily by most of this country's immigrant community from south-east Asia. The argument, which I thought that I had put clearly, is that a social wage will blur the message about what an individual's skills are worth in the current market. Whether that is deemed fair is another issue, but that is what will happen. 
 We will say much more about this subject on Report. There are many different issues involved—issues of principle as well as what is fair to business. In that context, we will not now press the amendment to a Division. The Government must properly make the case as to why they will not allow individuals choice, and state what economic and other advantages they perceive will be gained by their insisting on a mechanism that pays everything via the employer. There are widely acknowledged and powerful arguments against that in principle, aside from the issue of the burdens that are placed on small business. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Howard Flight: I beg to move amendment No. 103, in page 16, line 19, at end insert
'except for recipients of the child care elements of income support and income based jobseeker's allowance, which shall continue to be paid by the Department of Work and Pensions.'.
 Amendment No. 103 relates back to the debate that we had on clause 1(3)(d). Some points have been dealt with, but the overall position is not entirely clear. Clause 1(3)(d) removes the child care elements of income support and income-based jobseeker's allowance. As the Minister explained, those will be wrapped into the child credit element of the new working tax credit. We suggested that it would have 
 been better to leave them as the responsibility of the Department for Work and Pensions, and this amendment repeats that in the context of payment. 
 Of the issues that need clarification, the first is that many people who are entitled to the current child care elements of income support and jobseeker's allowance may not be in work. We must be clear about how they will qualify to pick up the equivalent as a work-related tax credit. Another issue is that many people in work are likely to work relatively few hours, so they might fall outside the hours requirement. Even if they are in work, they may not be entitled to any working tax credit either. 
 I am sure the Government do not intend the people most in need to be disadvantaged by the Bill, but I am not clear how someone will qualify for the replacement under the new arrangements when they are disqualified from working tax credit. Clearly something else will be needed to replace that, and I want to know what that will be. The amendment would have gone with amendment No. 94, which would leave the benefits, which are not work related, within the purview of the Department of Work and Pensions.

Dawn Primarolo: I am at a bit of a loss to know what to say on the amendment. I could suggest that the hon. Gentleman reread what I said when we debated clause 1. I understand his point about there being a link.
 The amendment refers to the child tax credit. As I made clear at the beginning of the Committee and throughout subsequent debates, the child tax credit has no work conditions. Anyone who gets either income support or JSA, and who is therefore likely to be unemployed, will get the full child tax credit which replaces the child premiums that existed before in income support and JSA. To return to the position in which child premiums for those who were not in paid work were part of income support and JSA would break the back of the principle of child credit, which is that it is paid on the assessment of the needs of the children, regardless of whether the adults in the family are in or out of work. 
 It would make no sense to say that those in paid employment can have the child tax credit and those who are unemployed can receive income or JSA with the premiums restored. To have it administered by two different Departments completely removes the advantage of the continuous stream applied for at one point and administered by one Department. The payment is made directly to the main carer. I hope that the hon. Gentleman would see that it would be nonsense to keep income support and JSA in place. If the adult or adults in the family are in receipt of income support or JSA and there are children in the family, the child tax credit is given to them automatically at the maximum amount. As they move into paid employment and up the income stream, there will be a gradual withdrawal of the child tax credit as the tapers and the threshold operate.

Howard Flight: Am I correct in understanding that the extra element of child tax credit that such people will receive will equate to what they would have received
 under income support and JSA, and that there is no element within the working tax credit in respect of children that relates to what they would have got?

Dawn Primarolo: If the hon. Gentleman looks at the increases in the child premiums in income support and JSA he will see that the Government have been aligning those premiums with the working families tax credit, and that they will now be in the child tax credits. Whether the family is in or out of work, the maximum payment for the child will be the same.

Howard Flight: As I pointed out, the amendment was tabled in conjunction with a previous amendment. I am satisfied that there are no problems. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Howard Flight: I beg to move amendment No. 101, in page 16, line 21, at end insert—
''provided that the regulations shall not directly or indirectly require the recipient to hold a bank account''.

Jimmy Hood: With this it will be convenient to take amendment No. 113, in page 16, line 21, at end insert—
''provided that the regulations shall provide that payment shall be through post offices where the claimant elects for payment by such method''.

Howard Flight: The amendments will be known as the post office amendments. The issue is whether regulations will directly or indirectly require a citizen to hold a bank account. That is implicitly the case in the Bill, and paragraph 150 of the consultative document says that all direct payments of new tax credits will be made to a client's bank account. However, many of the most needy will not have bank accounts, and the Government have admitted that the universal bank arrangements may not be in place for April 2003. Therefore, the amendments provide for payments to be made to a post office account, if someone so elects.
 There are two aspects to consider. First, it is unlikely that the universal bank facilities will be in place to deal with payments when the Bill comes into effect. Secondly, we should consider what is convenient to tax credit recipients. The amendment is partly a probing amendment and partly a matter of principle.

James Clappison: I wish to set the amendment against the background of events surrounding the post office, to which the Bill represents an important development. When I say ''post office'', I mean the network of 17,000 sub-post offices throughout the country. Last year, I believe that we lost more than 500 of them; a question mark hangs over the future of many.
 Many sub-postmasters and sub-postmistresses are thinking hard about whether they will be able to continue in business. They are looking for anything that might help them to survive. They face the prospect of automated credit transfers coming into effect in April 2003. The Government led them to believe that the universal bank would be up and running by then. 
 That would have helped to offset the loss of revenue that they will suffer when ACT replaces the transactions that the Government paid them to administer, and the loss of custom from people coming through the sub-post offices. The amendments would provide some help to sub-post offices at a time when they need help. 
 Recent reports suggest that the universal bank will not be up and running by April 2003. It would be useful if the Minister commented on that. What are the Government's plans for the scale of the universal bank? How many account holders do the Government anticipate? That would be of great interest to sub-post offices. This week, a survey from Consignia, which has a commercial interest, stated that up to half of the sub-post offices in the country could close. Sub-postmasters and postmistresses are thinking long and hard about their future, and I am sure that they welcome the amendment's highlighting of their plight.

Richard Younger-Ross: I support the comments of the hon. Member for Hertsmere. It is important to include a clause that allows payment to a post office. In my constituency, there are people who have experienced changes in their employment. They have been paid fortnightly via their employer, which makes their cash flow very difficult and chips away at the narrow profit margin of small sub-post offices, such as the one in Moreton Hampstead. Accepting the amendment would help such post offices until the universal bank is in place. The principle of allowing payment to a post office is vital. At another stage, amendments may be put that would introduce an exclusion for small employers, requiring payments to be made by other methods. I support the amendment.

Dawn Primarolo: Let me answer directly the points on the payment of tax credits. I understand the concern of the hon. Member for Hertsmere regarding ACT, but I am not tempted to enter into a debate about the Government's plans for post offices.
 The hon. Gentleman will be aware that those who are potentially eligible for new tax credits, especially those in poorer families, may not have access to a bank account. However, he will also be aware that direct payments by other methods, such as order books, do not always provide a reliable way of getting the money to those entitled to it. The Government are committed to modernising the payment mechanism to reduce the use of such methods. 
 The Government are also spearheading a drive to tackle financial exclusion and make easily available suitable types of bank accounts to those who have been unable or unwilling to use banks. To achieve that, work is being undertaken with the high-street banks and the Post Office to ensure that suitable, accessible accounts are made available. High-street banks are already offering new accounts and arrangements are being made to enable customers to access them through a post office. The crucial factor is not where the account is held, but where it can be accessed. 
 Work is being undertaken to create a new post office account for those who are unable to use the new types of bank account. That will ensure that claimants are 
 able to access some sort of account, whether through a bank or post office, into which their tax credits can be securely paid. Claimants can still go to the post office or sub-post office to collect their money. Payment of automatic credit transfer will provide that new tax credit claimants' payments will be made more flexibly, and claimants will be able to access those funds via a wide range of outlets, including post offices, which are the most convenient points of access for many. 
 The hon. Gentleman tried to tempt me into a debate subject to rules of confidentiality, dealing with the discussions of another Department about the Post Office. I am not able to join that debate. Suffice it for me to say that, as the Prime Minister said in his statement, claimants will still be able to go to the post office to withdraw their money, whether that be from one of the new high-street bank accounts, or one of the post office accounts. That provides a good basis for secure delivery direct to the individuals. It minimises the risk of things going wrong or the book being stolen. It gets the money to the family concerned, and at the same time ensures flexibility over the point at which it could be withdrawn. 
 Given his concerns about fraud, I hope that the hon. Gentleman will accept that that is the right way to proceed, and that my undertaking about being able to draw money via the post office satisfies his wider concerns about the problems faced by post offices in rural areas.

Howard Flight: I thank the Minister for her comments, but she has not addressed my concerns. First, what happens if the universal bank facility is not available within the timetable of the Bill? It is not satisfactory simply to say that it will be, because those responsible for it in Government are giving out distinct noises to the effect that the project is in dire trouble, and those on the other side of the coin tell exactly the same story. It clearly would be foolhardy to enact a piece of legislation that depends on the money being dispersed via a mechanism that, when the time comes, is not there. What alternative arrangements do the Government propose in the event that that happens?
 Secondly, if the universal bank comes to life and works, it is intended that people should go to the post office and draw money out of their universal bank account. For many that may be the only practical way to draw money out. That does not entirely answer the point of principle. The Minister implied that it would be the only mechanism and that if people wanted to 
 have child tax credit vouchers to cash at the post office like child benefit vouchers, they could not do so. It would only be the universal route. 
 The third point, which she wisely sought to sidestep, relates to the problems facing the post office. Self-evidently, the whole arrangement of universal bank accounts and drawing cash at the post office will not work if half the post offices have disappeared. That is an issue in some of the most deprived rural and inner city areas where there are no banks and where post offices are crucial. For the Bill to work in getting the child tax credit money to the citizens in need, there must be an alternative to the universal bank in case it is not running, and enough post offices to dispense the money if it is.

Dawn Primarolo: I understand that, but the main issue is not whether people can draw cash from a post office or a sub-post office because an account is held there or because they need to go to a post office to cash a giro. The wider issue is not about how we choose to pay the tax credits. We must deal with the issues of social exclusion and reduce the chances of fraud, which clearly points towards making sure that bank accounts are available. Alternative payments would have to be made if they were not. People still need to go to the post office to cash a giro or to draw out money that is held in a post office account. The points that the hon. Gentleman makes to get a wider debate on post offices are not relevant. I ask him to withdraw his amendment or I will ask my hon. Friends to vote against it.

Howard Flight: I am sorry, but the Minister's response is unreasonable. Hon. Members need to know that effective facilities will be in place for people to get their child tax credit money.

Dawn Primarolo: I said that if the accounts were not in place another method would have to be found to ensure that the money got to them. We have that power. Whether people had a giro or a bank account, it would have to be at a post office or a bank.

Howard Flight: Will the Minister say a little more to clarify what those other methods might be?

Jimmy Hood: Order. I have agreed to convene our Programming Sub-Committee in this Room at 4.15 pm.
 It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
Adjourned till this day at half-past Four o'clock.